In the year 2005, in Anytown, suppose that one person is willing to pay $1,000 for relief from hay fever; another two are willing to pay $350; about five more are willing to pay $50; one is willing to pay $40; one is willing to pay $35; one each is willing to pay $34, $32, $30, and $28; about a dozen are willing to pay $10; four are willing to pay $5; and half of the rest of the town (another 75 people) are willing to pay $1. a. Draw the demand curve for hay fever relief in Anytown. b. What is the potential total benefit (total of incremental value) from relief of hay fever if it is provided to everyone who asks? To everyone willing to pay $35 or more? c. If the price of hay fever medication is $20, what is the quantity demanded? What is the consumer surplus (total net value or benefit) for those who are willing and able to pay for the hey fever medication?
In: Economics
A fund manager is concerned about the performance of the market over the next year and plans to use one-year futures contracts on the S&P 500 to hedge the risk. The current index level is 1,200, and the one-year risk-free interest rate is 4% p.a. with continuous compounding. The current one-year futures price on a stock-index portfolio is 1,220. Assume that a dividend of $20 is expected after a year for a $1,200 investment in the market portfolio.
a) (4 points) Is the contract mispriced? Why? If yes, by how much is it overpriced (underpriced)?
b) (8 points) Identify an arbitrage opportunity such that you can obtain a riskless profit equal to the futures mispricing.
c) (8 points) Suppose that when you short sell the stocks in the market index, you do not receive any interest on the funds; instead, the broker receive it. Is there still an arbitrage opportunity now (assuming you don’t own the shares originally)? Explain the reason.
d) (10 points) Under the assumption of (c), i.e., you do not receive any interest on the funds if you short sell the stocks, whhat is the no-arbitrage range? That is, how high and how low can the futures price be such that there is no arbitrage opportunity?
In: Finance
Calculate the yield to maturity and the duration of the following portfolio of bonds.
one year T-bill yielding 4.65%
Three-year AAA-rated bond paying semiannual coupons at 5% with a yield of 5.25%
Two-year BBB-rated bonds paying semiannual coupons at 5.5% with a yield of 6.75%
In: Finance
A $1000 loan is being repaid with level payments at the end of each year for 4 years using a sinking fund method. The loan has 10% effective interest per year and the sinking fund has 8% interest per year. Create a sinking fund table for this payment plan. Include a column for the period, interest paid that period, sinking fund deposit that period, interest earned in the sinking fund that period and the balance in the sinking fund at the end of that period.
In: Finance
In a given year, the grade point average (GPA) of Statistics majors at the University of South Carolina is Normally distributed with and . Answer the following. ?=2.1?=0.25a. What GPA interval contains the middle 95% of all students? Sketch this.
In: Statistics and Probability
Cynthia is a calendar year individual who is an active partner in the fiscal partnership. The Partnership has a tax year ending 4/30. Cynthia's share of the Line (1) Ordinary Business Income is $24,000 for the partnership's first year ending 4/30/21. Each month beginning with 5/1/20 the partnership made a $1,000 distribution to Cynthia (other partners got similar distributions).
1. For her 2021, tax return how much income would Cynthia report from the partnership?
2. Cynthia also receives a guaranteed payment of $15,000. How much if any income must Cynthia report from the partnership on her Form-1040 2021 tax return?
3. If Cynthia's share of Line (1) income was a loss of (5,000) and she received a guaranteed payment of $8,000, how much self-employment income would Cynthia report for the year?
In: Finance
Below is a list of accounts and balances for Sandals Inc. for the year ending September 30, 2020. All balances are in thousands of dollars. Sandals Inc. follows IFRS. Assume a tax rate of 25%. Exclude the presentation of earnings per share for this question.
| Account Title | Balance |
| Accounts Payable | $9,500 |
| Accounts Receivable | $13,700 |
| Accumulated Depreciation | $1,500 |
| Advertising Expense | $1,400 |
| Cash | $19,800 |
| Cash Dividends | $4,100 |
| Common Shares | $11,200 |
| Cost of Goods Sold | $19,200 |
| Depreciation Expense-Office Equipment | $60 |
| Depreciation Expense-Store Equipment | $800 |
| Gain on Foreign Currency Translation Adjustments | $120 |
| Gain on Sale of Discontinued Operations | $2,500 |
| Income from Operating Discontinued Operations | $7,500 |
| Interest Expense | $1,100 |
| Merchandise Inventory | $17,900 |
| Miscellaneous Administrative Expenses | $570 |
| Notes Payable | $22,000 |
| Office Salaries Expense | $1,400 |
| Prepaid Insurance | $1,500 |
| Property, Plant and Equipment | $26,800 |
| Rent Expense-Office | $430 |
| Rent Expense-Retail | $1,380 |
| Retained Earnings (beginning balance) | $17,778 |
| Sales Salaries Expense | $2,900 |
| Sales Discounts | $1,100 |
| Sales Returns and Allowances | $550 |
| Sales Revenue | $48,000 |
| Unearned Revenue | $1,400 |
Notes:
Unlimited common shares are authorized and 2,380 have been issued
and are currently outstanding.
The notes payable is payable over 5 years and $4,400 will be paid
by September 30, 2021.
Do not enter dollar signs or commas in the input boxes.
Round all answers to the nearest whole number.
Do not use the negative sign for any values.
a) Prepare a statement of comprehensive income by function for the
year ended September 30, 2020.
| Sandals Inc. | |
| Statement of Comprehensive Income | |
| For the Year Ended September 30, 2020 | |
| Sales Revenue (net) | Answer |
| Cost of Goods Sold | Answer |
| Gross Profit | Answer |
| Selling Expenses | Answer |
| Administrative Expenses | Answer |
| Operating Profit | Answer |
| Finance Costs | Answer |
| Profit before Income Tax | Answer |
| Income Tax Expense | Answer |
| Profit for the Year from Continuing Operations | Answer |
| Profit for the Year from Discontinued Operations | Answer |
| Profit for the Year | Answer |
| Other Comprehensive Income, Net of Tax | |
| Gain on Foreign Currency Translation Adjustments (net of tax) | Answer |
| Total Comprehensive Income | Answer |
b) Prepare a statement of changed in equity for the year ended
September 30, 2020. There was no opening balance in the accumulated
other income account and FlipFlop Inc. did not issue any new common
shares in the fiscal year ended September 30, 2020.
| Sandals Inc. | ||||
| Statement of Changed in Equity | ||||
| For the Year Ended September 30, 2020 | ||||
| Common Shares | Retained Earnings | Reserves | Total Equity | |
| Opening Balance | Answer | Answer | Answer | |
| Profit for the Year/Net Income | Answer | Answer | ||
| Other Comprehensive Income | ||||
| Foreign Currency Translation Adjustments | Answer | Answer | ||
| Total Comprehensive Income | Answer | Answer | Answer | |
| Transactions with Owners | ||||
| Dividends on Common Shares | Answer | Answer | ||
| Total Transactions with Owners | Answer | Answer | ||
| Closing Balance | Answer | Answer | Answer | Answer |
c) Prepare a statement of financial position as at September 30,
2020.
| Sandals Inc. | ||
| Statement of Financial Position | ||
| As at September 30, 2020 | ||
| Assets | ||
| Long-Term Assets | ||
| Property, Plant and Equipment (net) | Answer | |
| Total Long-Term Assets | ||
| Current Assets | ||
| Prepaid Insurance | Answer | |
| Merchandise Inventory | Answer | |
| Accounts Receivable | Answer | |
| Cash | Answer | |
| Total Current Assets | Answer | |
| Total Assets | Answer | |
| Equity Attributable to Owners | ||
| Common Shares, unlimited authorized, Answer issued | Answer | |
| Retained Earnings | Answer | |
| Reserves | Answer | |
| Total Equity Attributable to Owners | Answer | |
| Liabilities | ||
| Long-Term Liabilities | ||
| Notes Payable, Long-Term Portion | Answer | |
| Total Long-Term Liabilities | Answer | |
| Current Liabilities | ||
| Accounts Payable | Answer | |
| Unearned Revenue | Answer | |
| Notes Payable, Current Portion | Answer | |
| Total Current Liabilities | Answer | |
| Total Liabilities | Answer | |
| Total Equity and Liabilities | ||
In: Accounting
The following is a list of an economy’s National Income Account data for a particular year (in billions of dollars). Government Transfer Payments: $16 Rents: 16 Income Receipts from Rest of the World 37 Exports: 24 Income Payments to Rest of the World 45 Corporate Profits: 88 Government Purchases Of Goods & Services: 69 Interest Income: 19 Personal Income Taxes: 38 Dividends: 23 Corporate Income Taxes: 28 Imports: 17 Indirect Business Taxes: 12 Proprietors’ Income: 25 Payroll Taxes: 21 Undistributed Corporate Profits: 19 Wages & Salaries: 230 Personal Consumption Expenditures: 267 Depreciation (Capital Consumption Allowance): 14 Net Private Domestic Investment: 47
Calculate GDP, GNP, NNP, National Income, Personal Income and Disposable Personal Income. You should be able to compute GDP using both the expenditures approach and the income approach
Using the following data, calculate GDP, GNP and NNP by both the expenditure approach and the income approach (dollars in billions). Indirect Business Taxes: $217.5 Net Exports: 23.3 Personal Consumption Expenditures: 2,672.8 Corporate Profits: 680.7 Gross Private Domestic Investment: 895.3 Interest Income: 279.8 Government Purchases of Goods & Services: 934.7 Proprietors’ Income: 130.6 Depreciation/Capital Consumption Allowance: 287.2 Rents: 33.8 Wages & Salaries: 2,896.5 Income Receipts from Rest of the World 247.1 Income Payments to Rest of the World 188.9
By the way, what is Net Investment for this economy?
Price Index Problem: The following table gives information about weekly per capita food consumption and food prices in Russia before and after the 1917 Communist Revolution. Taking 1913 as the base year, calculate a Food Price Index for 1928 and 1940. Average weekly wages for the years covered in the table were 6 rubles in 1913, 14 rubles in 1928 and 83 rubles in 1940. Using the Food Price Indexes you have just calculated, assess what happened to the real wages of Russian workers between 1913 and 1940. Food prices in Russia before and after the 1917 Revolution (in rubles per kilogram, except milk in liters and eggs in units)
Foodstuffs consumed weekly Price Price Price in Moscow in 1926 Quantity 1913 1928 1940 Black Bread 2.46 kgs 0.07 0.08 0.85 Wheat flour 0.79 kgs 0.12 0.22 2.90 Potatoes 3.04 kgs 0.05 0.09 1.20 Beef 0.92 kgs 0.46 0.87 12.00 Mutton 0.17 kgs 0.34 0.79 14.00 Sugar 0.45 kgs 0.34 0.62 3.80 Milk 1.24 ltrs 0.11 0.06 2.10 Butter 0.11 kgs 1.15 2.43 17.50 Eggs 1.60 eggs 0.13 0.20 0.85 Sunflower oil 0.12 kgs 0.15 0.53 15.65
Find the proportions of consumption spending and investment spending in US GDP. What proportion of US GDP is comprised of wages. The information can be found at the BEA website. 6.
US manufacturing output roughly doubled in the past twenty-five years, but that higher output is produced with 1/3 fewer workers. How much has productivity increased in US manufacturing over the past twenty-five years?
In: Economics
Corporation is preparing its budget for the coming year. The first step is to plan for the first quarter of that coming year. Waterways gathered the following information from the managers.
Sales:
|
Actual unit sates for November |
113,500 |
|
Actual unit sales for December |
103,100 |
|
Expected unit sales for January |
114,000 |
|
Expected unit sales for February |
113,500 |
|
Expected unit sales for March |
116,000 |
|
Expected unit sales for April |
126,000 |
|
Expected unit sales for May |
138,500 |
|
Unit selling price |
$12 |
Waterways wants to keep 10% of the next month’s unit sales in ending inventory. All sales are on account. 85% of the Accounts Receivable are collected in the month of sale and 15% of the Accounts Receivable are collected in the month after sale. Accounts receivable on December 31 totaled 183,780.
Direct Materials:
The product uses metal, plastic, and rubber. In total, each unit requires 2 pounds of material at an average cost of 0.75 per pound.
Waterways likes to keep 5% of the materials needed for the next month in its ending inventory. Payment for materials is made within 15 days. 50% is paid in the month of purchase and 50% is paid in the month after purchase. Accounts Payable on December totaled $120,595. Raw materials on December 31 totaled 11,295 pounds.
Direct Labor:
Labor requires 12 minutes per unit for completion and is paid at a rate of $18 per hour.
Manufacturing Overhead:
|
Indirect materials |
30 cents per labor hour |
|
Indirect labor |
50 cents per labor hour |
|
Utilities |
45 cents per labor hour |
|
Maintenance |
25 cents per labor hour |
|
Salaries |
$52,000 per month |
|
Depreciation |
$16,800 per month |
|
Property taxes |
$2,675 per month |
|
Insurance |
$2,200 per month |
|
Janitorial |
$1,800 per month |
Selling and Administrative Expenses:
Variable selling and administrative cost per unit is $2.40.
|
Advertising |
$15,000 per month |
|
Insurance |
$1,400 per month |
|
Salaries |
$72,000 per month |
|
Depreciation |
$2,500 per month |
|
Other fixed costs |
$3,000 per month |
Other Information:
The cash balance on December 31 totaled $220,500, but management has decided that it wants to maintain a cash balance of at least $750,000 beginning January 31. Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with the First National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest. Waterways borrows on the first day of the month and repays on the last day of the month. Reserve repayment, if required, until Waterways can pay the entire amount. A $250,000 equipment purchase is planned for February.
Instructions (Do all parts):
Note: All budgets and schedules should be prepared by month for the first quarter (January, February, and March). Round all figures to the nearest dollar. For labor hours round to whole hours.
e. Prepare a manufacturing overhead budget.
f. Prepare a selling and administrative budget.
g. Prepare a schedule for expected cash collections from customers.
h. Prepare a schedule for expected payments for materials purchases.
i. Prepare a cash budget.
In: Accounting
The E.N.D. partnership has the following capital balances as of the end of the current year:
| Pineda | $ | 210,000 |
| Adams | 190,000 | |
| Fergie | 180,000 | |
| Gomez | 170,000 | |
| Total capital | $ | 750,000 |
|
|
||
Answer each of the following independent questions:
Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $211,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners?
Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $335,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners?
In: Accounting